2021 INSC 0247
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 10827 of 2010
Mangala Waman Karandikar (D) TR. LRS.                   …Appellant(s)
Versus
Prakash Damodar Ranade         …Respondent(s)
JUDGMENT   
N.V. R AMANA , CJI   
1. This appeal is filed against the judgment of the Bombay High Court,
in Second Appeal No. 537 of 1991, wherein the second appeal was
allowed in favour of the respondent and the decree in favour of the
appellant herein was set aside.
2. This   case   arises   out   of   a   contract   entered   into   between   the
Appellant (since deceased represented through Legal Heirs) and the
Respondent.   Initially   Appellant’s   husband   was   running   a   business
of   stationary   in   the   name   of   “Karandikar   Brothers”   before   his
untimely demise in the year 1962. After his demise, she continued
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the business for some time. After a while, she was unable to run the
business   and   accordingly   decided   to   let   the   Respondent   run   the
same   for   some   time.   She   entered   into   an   agreement   dated
07.02.1963, wherein following terms were reduced in writing: 
“2. For the last about 24 to 25 years, a stationary shop by
the   name   Karandikar   Brothers   belonging   to   you   of   the
stationary,   note   books   and   books   is   being   run   in   the
premises   situated   in   City   Survey   no.   196/66   (New   House
No. 1643) at Sadashiv Peth, Pune. I request to you to give
the   said   shop   to   me   for   running   the   same.   Accordingly,
you   agreed   for   the   same.   Accordingly,   an   agreement   was
reached between us. The terms and conditions whereof are
as follows:
A. The   stationary   shop   ∙   by   name   "Karandikar   Brothers"
belonging   to   you   of   the   stationary   materials   which   is
situated in the premises described in Para 1 (a) above and
in which the furniture etc. as described in Para l(b) above
belonging   to   you   is   existing   is   being   taken   by   me   for
conducting   by   an   agreement   for   a   period   of   two   years
beginning from 1 st
 February 1963 to 31 st
 January 1965.
B. The rent of the shop described in Para 1 (a) above is to be
given   by   you   only   to   the   owner   and   I   am   not   responsible
therefor. I am to pay a royalty amount of Rs. 90 /­(Rupees
Ninety   only)   for   taking   the   said   shop   for   conducting,   for
every   month   which   is   to   be   paid   before   the   5th   day   of
every month.”
3. Time after time, the contract was duly extended. In 1980s, desiring
to   start   her   husband’s   business   again,   appellant   herein   issued   a
notice   dated   20.12.1980   requesting   the   Respondent   herein   to
vacate the suit premises by 31.01.1981. The Respondent replied to
the   aforesaid   notice   claiming   that   the   sale   of   business   was
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incidental   rather   the   contract   was   a   rent   agreement   stricto   sensu .
Aggrieved   by   the   Respondent’s   reply,   the   appellant   herein   filed   a
civil suit being RCS. No. 764 of 1981 before the Court of Joint Civil
Judge, Junior Division, Pune. During the course of the trial, one of
the   important   questions   that   the   Trial   Court   framed,   which   is
relevant for our purpose can be observed hereunder:
“Does the Defendant prove that from the year 1963
he is licensee in the said suit premises as contended
in  para  7  of the  plaint?   And thereby  on  the  date of
suit   he   became   tenant   of   the   suit   premises   under
Section 15A of the Bombay Rent Act?”
The Trial Court by Judgment dated 30.08.1988, decreed the Suit in
favor   of   the   appellant   herein   and   held   that   the   purport   of   the
Agreement   was   to   create   a   transaction   for   sale   of   business   rather
than   to   rent   the  aforesaid  premises  to   the   Respondent  herein.   The
Court   while   negating   the   contention   of   the   Respondent,   that   the
shop premises was given to him on license basis held as under:
“8.   The   defendant   does   not   deny   the   fact   that   originally   the
husband   of   deceased   Mangala   Karandikar   namely   Waman
Karandikar   used   to   conduct   the   business   of   the   suit   shop.
The   business   of   stationary,   books   and   notebooks   was   being
run by him. Same business has been handed over to him. …
The   suit   shop   and   the   said   business   came   to   deceased
Mangala   Karandikar   after   the   death   of   her   husband.   It   has
come   in   the   evidence   50   that   because   of   death   of   her
husband   and   after   the   death   of   her   husband,   she   was
unable   to   continue   the   business.   In   the   meantime,   the
defendant approached to her. Thereupon she agreed to hand
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over   the   running   business   to   the   defendant.   This   fact   has
been   denied   by   the   defendant.   The   defendant   raises   the
contention that the plaintiff never had the shop of stationary,
but   she   had   the   grocery   shop.   After   the   death   of   her
husband,   it   was   lying   closed   for   years   together.   In   the   year
1963   the   defendant   approached   the   plaintiff   and   thereupon
the plaintiff agreed to give the suit shop. On licence basis to
him.   This   plea   of   the   defendant   is   negativated   by   the   terms
and   conditions   of   the   agreement   deed   itself.   The   heavy
burden   was   lying   on   the   defendant   to   prove   that   there   was
licence   agreement.   He   has   not   discharged   the   same.
Therefore,   the   document   became   much   relevant,   and   it   has
got   material  importance.   If   the  conditions  as  enumerated  in
this   document   Exh.33   are   carefully   scrutinized,   it   will
become   significant   that   the   deceased   plaintiff   had   the   sole
intention to hand over' the running business of the suit shop
to   the   defendant.   There   had   been   no   intention   to   create
the leave and licence in respect of the suit premises.  The
deceased plaintiff had very specifically and by taking at most
case   and   precaution   excluded  the   word  premises   of   shop   in
the agreement. But all the while the word ∙ "shop" was used
with   reference   to   business   only.   Nextly   she   has   also
excluded   the   word   rent   to   be   used.   She   had   specifically
made   the   recital   of   imposing   the   royalty   on   the
defendant.   The   word   licence,   for   the   purpose   of   Bombay
Rent   Act   always   refers   to   premises.   The   defendant   has   to
seek   the   benefit   under   the   provisions   of   Bombay   Rent   Act.
Here the plaintiff had never intended to create the leave and
licence in respect of the suit shop. The defendant has relied
upon the receipt Exhibit­40. This is the document produced
by   the   plaintiff.   It   discloses   that   the   word   "rent"   has   been
shown in this respect. The defendant is taking benefit of this
fact   and   alleging   that   the   rent   was   being   recovered   and   not
the royalty. Here it is worth to be noted that the plaintiff had
at   all   no   intention   to   recover   the   rent.   All   the   while,   it   has
been   the   case   of   the   plaintiff   that   the   royalty   was   being
recovered.   Therefore,   I   am   unable   to  hold   that   the   rent   was
being recovered by the plaintiff. …
“14. Issue Nos. 5 and 6. ­ The defendant has alleged that he
is   the   tenant   in   the   suit   shop.   Initially,   the   premises   were
given to him on licence basis but by virtue of amendment to
Bombay   Rent   Act   and by  virtue of  insertion  of  section  15(A)
all the licensees have become the tenants. Learned advocate
appearing   on   behalf   of   the   defendant   places   his   reliance   on
Case  Law   reported  in  A.I.R.  1987   Supreme  Court   page  117.
No doubt there can be no dispute regarding the principles of
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law .  In  the   instant  suit,   the  defendant  has  utterly  failed
to   prove   that   the   shop   premises   were   given   to   him   on
licence   basis.   Therefore,   no   question   of   his   tenancy   can
arise at any time. …”
( emphasis supplied )
4. Accordingly,   the   Trial   Court   ordered   the   respondent   to   hand   over
the suit property to the appellant herein including the furniture and
other articles. 
5. Aggrieved   by   the   Trial   Court   judgment,   the   Respondent   filed   an
Appeal  before   the   Court   of   Additional   District   Judge,   Pune   in  Civil
Appeal   No.   979   of   1988.   On   29.07.1991,   the   Additional   District
Judge   rendered   a   judgment   dismissing   the   appeal   filed   by   the
Respondent   herein.   Aggrieved   by   the   dismissal   the   Respondent
herein   filed   a   Second   Appeal   before   the   High   Court   of   Bombay   in
Second Appeal No. 537 of 1991. 
6. By   impugned   order   dated   07.11.2009   the   High   Court   of   Bombay
allowed the Second Appeal and set aside the Trial Court’s Order as
well   as   the   First   Appellate   Court’s   Order   and   held   that   the
Respondent had entered into a license agreement which is covered
under Section 15A of the Bombay Rent Act. Further the Court held
that   the   Trial   Court   did   not   have   the   Jurisdiction   to   try   the   cases
under   the   Bombay   Rent   Act,   the   appropriate   Court   should   have
been   Small   Causes   Court   established   under   the   Provincial   Small
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Causes Court Act. The Second Appellate Court also observed on the
merits of the case and held as under.
“22.   Thus,   considering   the   entirety   of   the   case,   in   my   view,
both   the   Courts   below   have   incorrectly   interpreted   the
document and the surrounding circumstances which, in my
view,   indicate   that   the   parties   had   in   fact   agreed   that   the
premises   were   transferred   to   the   appellant   on   a   leave   and
license basis.”
7. Aggrieved by the same, the appellant herein filed this appeal. 
8. The counsel for the appellant contended that the impugned order of
the   High   Court   erred   in   appreciating   the   language   of   the   contract,
which clearly points towards the intention of the parties to create a
license   for   continuing   existing   business,   which   was   run   by   late
husband   of   the   appellant.   On   the   other   hand,   the   counsel   for   the
respondent   has   supported   the   judgment   by   stating   that   there   is
extrinsic   evidence   which   shows   that   the   contract   entered   into
between the parties was a license to use the shop, which is covered
under   Bombay   Rent   Act.   In   this   light,   he   supports   the   impugned
order   to   state   that   the   Trail   Court   did   not   have   jurisdiction   in   the
first place.
9. Having  heard both the parties at  some length, at  the  outset before
we   analyse   this   case,   we   need   to   observe   some   principles   on
contractual   interpretation.  Unlike  a  statutory  interpretation,  which
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is   even   more   difficult   due   to   assimilation   of   individual   intention   of
law   makers,   contractual   interpretation   depends   on   the   intentions
expressed   by   the   parties   and   dredging   out   the   true   meaning   is   an
‘iterative   process’   for   the   Courts.   In   any   case,   the   first   tool   for
interpreting, whether it be a law or contract is to read the same.
10. It   is   usual   that   businessmen   often   do   not   sit   over   nitty­gritty   in   a
contract. In a document the language used by the parties may have
more   than   one   meaning.   It   is   ultimately   the   responsibility   of   the
Courts   to   decipher   the   meaning   of   the   words   used   in   a   contract,
having   regards   to   a   meaning   reasonable   in   the   line   of   trade   as
understood by parties. 1
 It may not be out of context to state that the
development of rules of contractual interpretation has been gradual
and   has   taken   place   over   century.   Without   going   into   extensive
study   of  precedents,  in   short,   we  may   only   state  that   the   path   and
development of law of interpretation has been a progress from a stiff
formulism to  a strict rationalism. 2
  
11.   It   is   clear   from   the   reading   of   the   contract   that   the   parties   had
intended   to   transfer   business   from   appellant   to   respondent   during
1   Investors Compensation Scheme v. West Bromwich Building Society , [1998] 1 WLR 896
2   Wigmore JH, “Wigmore on Evidence, Vol. 4” (1915) 25 The Yale Law Journal 163.
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the contractual period. This agreement was not meant as a lease or
license   for   the   respondent   to   conduct   business.   However,   the
respondent  contends  that the  meaning  of the  document  should not
be   culled   solely   with   reference   to   the   language   used   in   the
document,   rather   extrinsic   evidence   needs   to   be   utilized   before
adducing proper meaning to the contract. In this regard he submits
that   on   consideration   of   all   the   extrinsic   evidence,   the   contract
should   be   read   as   a   leave   and   license   agreement,   which   is   covered
under the Bombay Rent Act. He draws his support from Section 95
of   the   Indian   evidence   Act   to   state   that   the   document   needs   to   be
interpreted   having   regard   to   external   evidence   such   as   receipts   of
payment under the contract addressed as rent receipts etc.
12.   It  may  be  noticed  that  the  High  Court  had  appropriately  identified
the question of law in the following manner:
15. The  debate  therefore  revolves  around the  question as  to
whether  the  agreement  of 7th  February,  1963  was a  license
to   conduct   a   business   in   the   premises   or   was   a   license   to
run   the   existing   business   which   was   being   run   by   the
respondents in the suit premises. Does the document create
an interest in the premises or in the business?
13.   The High Court in order to answer the question utilized Section 95
of the Evidence Act, which reads as under:
95.   Evidence   as   to   document   unmeaning   in   reference   to
existing  facts.—When language  used  in  a document  is plain
in   itself,   but   is   unmeaning   in   reference   to   existing   facts,
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evidence may be given to show that it was used in a peculiar
sense. 
Illustration  A  sells  to  B, by  deed,  “my   house  in Calcutta”. A
had   no   house   in   Calcutta,   but   it   appears   that   he   had   a
house   at   Howrah,   of   which   B   had   been   in   possession   since
the execution of the deed. These facts may be proved to show
that the deed related to the house of Howrah.
Aforesaid   Section   is   part   of   Chapter   VI,   which   deals   with   ‘Of   the
exclusion of Oral by documentary evidence’ containing Section 91 to
100. Section 92 reads as under:
92.   Exclusion   of   evidence   of   oral   agreement.—When   the
terms   of   any   such   contract,   grant   or   other   disposition   of
property, or any matter required by law to be reduced to the
form  of a  document,  have been  proved according  to  the  last
section, no evidence of any oral agreement or statement shall
be admitted, as between the parties to any such instrument
or   their   representatives   in   interest,   for   the   purpose   of
contradicting,   varying,   adding   to,   or   subtracting   from,   its
terms:…
Proviso   (6).—Any   fact   may   be   proved   which   shows   in   what
manner   the   language   of   a   document   is   related   to   existing
facts.  
14. It is manifest from these two sections that it is only in cases where
the terms of the document leave the question in doubt, then resort
could   be   had   to   the   proviso .   But   when   a   document   is   a
straightforward  one  and presents  no  difficulty   in  construing  it,  the
proviso does not apply. In this regard, we may state that Section 95
only builds on the proviso 6 of Section 92.
15. If the contrary view is adopted as correct it would render Section 92
of the  Evidence  Act, otiose and  also  enlarge the ambit of  proviso  6
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beyond the main Section itself. Such interpretation, provided by the
High Court violates basic tenants of legal interpretation. 3
 Section 92
specifically   prohibits   evidence   of   any   oral   agreement   or   statement
which would contradict, vary, add to or subtract from its terms. If,
as   stated   by   the   learned   Judge,   oral   evidence   could   be   received   to
show   that   the   terms   of   the   document   were   really   different   from
those   expressed   therein,   it   would   amount   to   according   permission
to   give   evidence   to   contradict   or   vary   those   terms   and   as   such   it
comes   within   the   inhibitions   of   Section   92.   It   could   not   be
postulated   that   the   legislature   intended   to   nullify   the   object   of
Section 92 by enacting exceptions to that section. 
16. In line with the law laid down, it is clear that the contract mandated
continuation   of   the   business   in   the   name   of   ‘Karandikar   Brothers’
by   paying   royalties   of   Rs.   90   per   month.   Once   the   parties   have
accepted   the   recitals   and   the   contract,   the   respondent   could   not
have   adduced   contrary   extrinsic   parole   evidence,   unless   he
portrayed ambiguity in the language. It may not be out of context to
note   that   the   extension   of   the   contract   was   on   same   conditions.
3   Rohitash Kumar v. Om Prakash Sharma , (2013) 11 SCC 451 at pg. 459
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17. On   consideration   of   the   matter,   the   High   Court   erred   in
appreciating  the ambit of Section 95, which led to consideration of
evidence  which  only  indicates  breach  rather  than ambiguity  in  the
language of contract. The evidence also points that the license was
created   for   continuation   of   existing   business,   rather   than
license/lease of shop premises. If the meaning provided by the High
Court is accepted, then it would amount to Courts substituting the
bargain by the parties. The counsel for respondent has emphasized
much   on   the   receipt   of   payment,   which   mentions   the   term   ‘rent
received’. However, in line with the clear unambiguous language of
the contract, such evidence cannot be considered in the eyes of law.
18. Moreover, the  contention that  the aforesaid situation  is covered  by
the   Bombay   Rent   Act   is   misplaced.  Once   we   have   determined   that
the   impugned   agreement   was   a   license   for   continuing   existing
business,   Bombay   Rent   Act   does   not   cover   such   arrangements.
Therefore,   the   jurisdiction   of   the   trail   court   is   accordingly   not
ousted.
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19. In light of the above, the impugned order of the High Court cannot
be   sustained,   and   is   accordingly,   set   aside.   The   decree   of   the   trial
court   is   restored.   The   appeal   is   allowed   in   the   above   terms   and
there shall be no order as to costs.
..…..…….................CJI.
                      (N.V. RAMANA)
…...….................J.
             (SURYA KANT)
                  ……..………............J.
       ( ANIRUDDHA BOSE )
NEW DELHI;
MAY 07, 2021
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